Requires day care providers to escrow security deposits exceeding the value of two weeks of provided services

Title of bill

An act to amend the social services law, in relation to security deposits collected by child day care providers

Purpose

Requires day care providers to escrow security deposits in excess of the value of two weeks of provided services.

Summary of provisions

Amends the social services law by adding a new section 390-g to require child day care providers to escrow security deposits of an amount in excess of, but not equal to, the fee for two weeks of child care services into an escrow account which shall not be mingled with the personal monies or become an asset of the day care provider. The child day care provider must comply with this requirement and, prior to termination of services by the child's parent or guardian, must: a) provide child care services equal to the amount of time covered by the total amount of the security deposit; or b) return the excess security deposit plus accrued interest; or c) return the total amount of the security deposit plus accrued interest on the excess security deposit.

Justification

Before agreeing to provide child day care services, providers commonly request a deposit from a child's parent or guardian equal to the fee for two weeks of service. The deposit helps provide fiscal stability for the center in the event that parents discontinue service without providing the requested two weeks of notice. This request for a deposit is reasonable.

Occasionally, parents are required to deposit a sum larger than the fee for two weeks of service. In one instance this year, a parent provided a deposit of over $800 to her child day care provider. The provider later declared bankruptcy and closed without providing the services covered by the deposit and without returning any of the deposit to the parent. The provider claimed the money had already been used to cover business expenses.

The law should protect parents or guardians who are required to give deposits larger than the typical amount required equal to the fee for two weeks of service. This legislation would require the child day care provider to deposit the difference between the fee for two weeks of services and the total amount of the required security deposit into an escrow account which shall not be mingled with the personal monies or become an asset of the day care provider.

For example, if a center charges $250 per week of child day care services but requires a deposit of $1,000, then the difference of $500 between the total deposit and the fee for two weeks of service would be deposited into an escrow account, similar to that required for apartment rentals. The center would be required to a) provide child care services equal to the amount of time covered by the total amount of the security deposit; or b) return the excess security deposit plus accrued interest; or c) return the total amount of the security deposit plus accrued interest on the excess security deposit.

Legislative history

: New Bill

Fiscal implications

: None to the state.

Effective date

: This act shall take effect 60 days after becoming law.